Dixon: A visionary challenges property tax system

Published 6:23 pm, Friday, March 21, 2014

Connecticut's property tax system is a travesty.

The state's tradition of local government is so clunky as to be comical, bordering on the sad, in our have-and-have-not 21st Century.

Urban centers are the source of services of convenience -- entertainment, art, medicine, higher education, night life -- for suburbanites who scuttle back to their achieving public schools, their manicured lawns, their safer streets.

Stamford has its well-heeled satellites of Darien and New Canaan. Norwalk has Wilton and Westport. Greenwich is its own universe, firmament and gravitational field, where it only looks like the Range Rovers drive upside-down along East Putnam Avenue.

Bridgeport has Fairfield, Trumbull and Easton. Milford has Orange and Woodbridge. Shelton has its own Huntington section, Monroe and Newtown. Danbury has Ridgefield, Redding and New Fairfield.

All towns and cities have their varying political patronage traditions that taint local government in various ways. Ah, Bridgeport. Then there are the six-figure school administrators with minimal daily classroom contact.

The cities, as precisely explained to the General Assembly's budget-setting committee last week by Bridgeport Mayor Bill Finch, are the centers of poverty and social services. Hartford, Bridgeport and New Haven are the homes for most of the states returning inmates.

Finch, this year's president of the Connecticut Conference of Municipalities, pointed out that half of Bridgeport's properties don't pay taxes, making it even harder on homeowners and small businesses in a city where the average income is about $39,000.

There isn't a brave enough state leader, from governor on down to a first-term House member who still needs to set their GPS to get to the Capitol, who has the gall to propose a return to county government.

So Fairfield's two high schools have the big advantage over Bridgeport. Staples in Westport, arguably the best high school in the state, is a 20-minute drive from the gravely under-performing corridors and classrooms in Bridgeport's Harding High.

Cities and towns continue to go their own ways on purchases, police and fire coverage, road maintenance and plowing.

And if it wasn't enough, tax-exempt property such as non-profit hospitals and universities, place even heavier burdens on local taxpayers. The state gives cities that support hospital and colleges so-called payments in lieu of taxes (PILOT) that amount to a fraction of what the institutions would be charged in the real world.

That's why Speaker of the House Brendan Sharkey of Hamden may be as close to a visionary as the General Assembly has at this moment. He has proposed massively changing the PILOT system. His bill would let cities assess colleges and hospitals for full taxes, then let the institutions receive reimbursement from the state.

He said that over the years, non-profit hospitals have become huge businesses.

"While those missions and those services and those commitments remain on the part of these important institutions to our community, the notion of their being your mom-and-dad's non-profit, I think, has perhaps gone the way of the Hula Hoop, so to speak," Sharkey told the legislative Planning and Development Committee. "These institutions now, in today's world are major corporations with significant budgets and they look and act and feel a lot like any other major corporation, despite their non-profit status."

He said Yale University and Yale-New Haven Hospital voluntarily contribute to the city of New Haven. "But those examples are somewhat few and far between," he said. "There's a growing frustration, I think, on the part of the families and small businesses of our communities that host these institutions because they're the ones who are ultimately shouldering the burden of providing these tax exemptions to these corporations."

The reverse PILOT would obligate the corporations to pay local taxes, then apply to the state for reimbursement for taxes actually paid after negotiations with city officials. "We've shifted the burden from families and businesses in our host communities to the actual corporations themselves," Sharkey said.

He stressed that the bill would allow talks to center over what their actual taxes might be and what value a hospital or college's other contributions and subsidies to the cities may be. Oh yeah, and they're ability to pay would be in the equation.

"An argument can be made, I think, by some institutions that perhaps if they were forced to pay in full, it would result in layoffs, that would result in other program cuts, not just cuts to their community services, but other cuts, to personnel that would ultimate result in the loss of jobs," he said. "It would be incumbent on the corporations to make those arguments to their local communities and allow the communities to determine the risk that's associated with imposing the full tax rate on them and to take those factors into consideration. No host community wants to see any of these corporations go out of the business."

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He wants to start the program as soon as October, but it would take some legislative will that, at this point, I don't sense.